This is pretty interesting because it’s the first time that a hotel is being based on a “restaurant experience”. In fact, I cant even think of a restaurant within a boutique hotel that considers itself based on the hotel brand – although Jose Andres’ Bazaar at the SLS Hotel in LA seems to be pretty close.

This is a different approach for the Caesars brand and Caesars Entertainment as well since I cannot think of another instance where they have a different hotel brand within one of their properties other than the casino branded hotel. On the other end of the spectrum is MGM Resorts, Caesars Entertainment’s biggest competitor which has been building these sub-brands within their properties for years.

As an example, look at the Mandalay Bay which has both a Four Seasons Hotel and “THE hotel” in addition to a more basic Mandalay Bay hotel stay.. MGM Grand has “The Mansion” (a super exclusive hotel brand connected to the property, but deeply hidden, it isn’t bookable by the general public either – you need to be a high roller and invited to stay there), SkyLofts and a much, much smaller sub-brand – Signature by MGM Grand.

Anyone who is familiar with Caesars will applaud this decision because the Centurion Tower has been underwhelming for years, rightly so as it was the first tower to open in 1970 and has started to show its age. What’s interesting is how it was decided to renovate the Centurion Tower vs completing the Octavis Tower which was left unfinished after the recent recession. (The building looks finished from the outside, but is empty on the inside.)

The plan is to create a completely separate experience for the Nobu Hotel, with its own entrance and check-in desk instead of combining it with the rest of the Caesars property as is done now. Overall, this is a great idea and probably a win-win for both parties – Caesars & Nobu Hospitality, as encourages a new crowd to come to the Caesars Resort in Vegas, launches a new hotel brand without requiring as large of a capital outlay and lastly allows Caesars Entertainment to dip its waters in a new concept which can easily be replicated in their Atlantic City Casinos such as Bally’s and Caesars.

andrew@alconic-inc.com

Morgan Stanley — after failing to raise money for Revel last month — is launching a new $1.15 billion debt offering so Revel can finish construction, sources said, confirming a Standard & Poor’s LCD report.

The bank, which has hired JPMorgan to sell the loans, meets potential investors today.

Christie’s motivation seems to be based on the need for more jobs in NJ. What Christie seems to be ignoring is the fact that Atlantic City is losing a lot of visitors to Philadelphia and other out-of-state casinos.

One thing that will help projects like Revel and the Borgata is it’s focus on more than just gambling.. Atlantic City’s “Super casinos” such as Borgata, Revel and even Harrah’s and the Tropicana are able to tap not just the gambling public by having restaurants branded by celebrity chefs, popular nightclub venues, and headlining acts that cater more toward the younger set vs the platinum set.

No matter what, the finishing of Revel will give Atlantic City a big morale boost, and when its finished – bring in more visitors eager to see this new casino who will trickle out to the other casinos in town.

andrew@alconic-inc.com

I have to say, it’s hard to believe that this day actually came – almost a year later than it was originally supposed to open under the original developer Bruce Eichner, and 5 years after the project had its groundbreaking. In fact, a lot of people thought it would never open at all. It’s interesting to note that the Cosmopolitans neighbor – MGM’s CityCenter – took less time and is much, much much bigger.

I wanted to share some sidenotes about the Cosmopolitan and it’s development that seem to have been lost in the shuffle of it’s grand opening today..

-Unlike the original plans, condos will only be in the West Tower (the West Tower is the one not on the Las Vegas Strip), originally the condos were to be split between the two towers and intermixed with hotel rooms.

-There are about 2,000 condos available for sale still, only 214 are under contract – possibly to close on Jan 1st. (via LV Review Journal)

-Bruce Eichner, the original developer of the Cosmopolitan, is already off onto another project – just like he said he would be in the WSJ article I posted to in my first Cosmopolitan Las Vegas post. He is looking to finish the troubled One Madison Park highrise right on NYC’s Madison Square Park, an absolutely beautiful building which is going through the same troubles that the Cosmopolitan once went through – at least this time he’s trying to be the savior instead of looking for one.

-The interiors of the Cosmopolitan were designed by David Rockwell and the Rockwell Group – he’s the same person who created Starwood’s aLoft interiors, and a favorite restaurant of mine which is a little closer to home – Bobbys Burger Palace. Apparently Bruce’s original interior elements contained 20-ft high dancing robots, which to me would be just ridiculous.

-The Cosmopolitan project is still owned by Deutsche Bank, and Deutsche intends to make the project a long term investment and play an active role in its management. Out of all the other major Vegas/Atlantic City casino projects, Deutsche is the only one who actually stuck to it’s guns and finished the project in this economy. They get kudos in my book for that. Recently, Morgan Stanley let it be known via an SEC filing that they would let their Revel Atlantic City project essentially sit vacant and unfinished for years until the economy bounces back since they have been unable to find a buyer. That’s even after Morgan Stanley was willing to take no money for the project until the investor made a 20% return on their investment of at least $1.2 billion to finish and open the development.  The Fountainebleu in Vegas, which is over 70% finished – a lot of rooms were completely furnished – was purchased for only $150 million by Carl Icahn, leaving the lenders with almost a $1 billion loss.. Wow.. I think that in 5 to 10 years Deutsche Bank is going to look great by finishing this project and not selling it for a song. This economy is tough though, and if you don’t have the capital, well – you’re hands are tied. Deutsche Bank is a large, worldwide company, but they are still almost have the size of JP Morgan Chase & Bank of America by assets.

-Ok, I have to make one mention of the interior of the hotel which has been bugging me until today.. You know those 8 pillars in the lobby (if you’ve seen pictures or video of the lobby, you’ll know what I mean) are full video walls on all four sides, floor to ceiling, no projection screens, no 3D images, no LED walls, they are full motion video screens. Wow.

Best of luck to the Cosmopolitan! Only 40 more minutes until the first bet is placed.

andrew@alconic-inc.com

Today at Wyndham Worldwide’s first global brand conference, it was announced that Wyndham has licensed the Planet Hollywood name and likeness, enabling it to begin franchising hotels using the brand throughout the world.

This is a great coup for Robert Earl who will finally be able to rapidly expand its presence with almost no capital and begin collecting licensing and franchising fees. Currently the only Planet Hollywood Hotel is located in Las Vegas and it was recently purchased by Harrah’s Resorts, Earl was previously a part owner in it along with Starwood Hotels & Resorts who used to operate the hotel portion of the resort.

I consider the Hard Rock & Planet Hollywood brands very similar, playing on the consumers desire to expose themselves to celebrities, Hollywood, movies, music, etc.

With that said, I’m not so convinced that there will be a very big market for the Planet Hollywood brand (similar to the Hard Rock Hotels brand really) – I can’t see Planet Hollywood Hotels becoming as ubiquitous Sheraton, or Hilton – I envision them located in large areas that can sustain a resort/convention center hotel – Orlando, LA, etc. The Planet Hollywood name evokes fun, craziness and over the top/big; which may be a bit more than most people want.

It will be interesting to see how the brand comes about.

andrew@alconic-inc.com

Rightly so, interest in the old Atlantic City Ritz-Carlton suddenly boomed and traffic to my blog quadrupled from people searching Google for information on the property and landing on a post I wrote in 2007 about The Chelsea.

The Ritz-Carlton Atlantic City as it appears today

For those interested in the former Ritz-Carlton Atlantic City here is a short history of the property, and also some links to more information about it:

The Ritz-Carlton Atlantic City

• Opened 1921
• One of the “original” Ritz-Carlton’s, along with Boston, NYC, Philadelphia, Boca Raton, and Pittsburgh
• Was converted into an “apartment-hotel” in 1960 and called “The Ritz-Carlton Apartment Hotel” – no longer affiliated with the Ritz-Carlton Hotel Company.
• Converted to all condos in 1982 and name officially changed to “The Ritz Condominiums”, as the Ritz-Carlton Hotel Company wanted “Carlton” dropped from it’s name.
• Continues to operate to this day as a residential condominium building and is still called “The Ritz Condominiums.

Websites on The Ritz-Carlton Atlantic City

• The Ritz Atlantic City Official Site
• History
• Timeline
• Ritz-Carlton.com Brand History

The official Ritz-Carlton history from their website shows a discrepancy with the beginning of the Ritz-Carlton brand (it says the brand originally started in Boston in 1927) and the construction of the Atlantic City location which we know opened in 1921. I remember finding the answer to that awhile ago – but I cannot recall what it is at this point.. If any one has any insight into it – please feel free to drop me a line andrew@alconic-inc.com.

Also – watch the show! If the first show is any indication of how the rest of the shows will be – it will be a series that will probably only rival The Sopranos in popularity (and not just because of the mob commonality). If you’re interested in reading the history of Atlantic City – the book the show is based off of is an EXCELLENT read. Starts when Atlantic City was first populated in the mid-1800′s and ends in modern times with Donald Trump.

Boardwalk Empire: The Birth, High Times and Corruption of Atlantic City

andrew@alconic-inc.com

This news really shouldn’t come as a surprise because it’s been an open secret that Trump would like to divest of the property which has been a perennial money loser and has quickly lost its luster as new, bigger and more popular venues have come online.

I could see this property fetching very little – similar to what recently happened with the Resorts property that was still sold for only $35 million – even after opening a $110 million tower in 2004 and undergoing a refinancing worth $360 million in 2007. Resorts sold for 1/10th of its value in less than 3 years.. A few years ago Trump Marina was valued around $400 million and from what I’ve heard is in worse shape than Resorts – both cosmetically and physically.

Would $25-30 million be too far fetched?? Depends on how desperate Trump is to sell the property.

One idea that could definitely raise interest in the property is combining it with MGM Resort’s small parcel which sits just to the north of Trump Marina that is also on the block. The only question remains is who would be willing to put that much of an investment into Atlantic City at this time.

andrew@alconic-inc.com

Supposedly the deal that Trump is looking for would swap the land under the property and the partner to put up the money for renovations and an addition adding about 600 more rooms to the property.

The type of partners Trump Entertainment Resorts is looking for: Planet Hollywood or Hard Rock Hotel

Both are popular brands that have wanted to open a Atlantic City Casino outpost for awhile now (both have restaurants in AC, but not an hotel resort based on the brands)

This could be a good sign that Trump is finally getting serious about Atlantic City and putting his money where is mouth is; you know he’s trying to really make something work if hes willing to share the name of his property (or even possibly replace it) with another brand name.

Bravo to Donald Trump finally toning down his ego.

andrew@alconic-inc.com

Another day, another casino in the sights of the Starwood Capital Group.

What’s going on here?

It’s interesting to watch how Starwood Capital has shown so much interest in Las Vegas casinos over the past month or so – the past few years even if you consider their initial bid for the Riveria on the strip.

Although its all rumors at this point, Bloomberg Business Week has a story about Starwood Capital’s (and Colony Capital’s) interest in purchasing the Rio casino from Harrahs. Harrahs has been looking to divest the property since they purchased the Planet Hollywood and is looking for interested bidders. Harrahs purcahsed the Rio in 1998 for $888 million, and according to the Business Week article – the property is only worth $500 million now.  

So why are all these private equity firms looking to get into the casino business? Its interesting to watch Carl Icahn place a bid on almost every project in Atlantic City & Las Vegas that is having financial difficulty, Starwood Capital’s interest in the Riveria and now apparently the Rio, along with Colony Capital’s current ownership of the Hilton Las Vegas and Atlantic City. Why?

I’d think that it would be too much trouble to go through the gambling licensing procedures for a private equity firm to even consider dabbling in this, but if you look at the history of these three firms – they have gambling in their blood.

Colony Capital has owned the Hilton in Las Vegas since 2004, the Atlantic City Hilton since 2005 and Resorts International since 2000.

Carl Icahn purchased the Sands casino in Atlantic City in the early 2000′s but quickly sold it to Pinnacle Gaming, but now he owns the unfinished Fontainebleau and the Tropicana in Atlantic City

Barry Sternlicht, from the Starwood Capital Group was probably the first out of these three to get into the casino business with his purchase of ITT-Sheraton which included Caesars World in I believe 1998.

Its interesting to see what everyones intention will be – its known that casinos are great for their free cash flow – something a Private Equity firm loves, but its obvious that some people look at the purchase of a casino as just a passing investment – similar to how Carl Icahn has looked at his investment in the Sands in Atlantic City and possibly how he will look at the Fontainebleau once the economy picks up.

andrew@alconic-inc.com

The sale of the Trump Marina to the New York firm Coastal Development for a re-branding into a Margaritaville Casino Resort has been called off. Like can be expected, both sides have disputed what actually caused the deal to be called off – but one thing is for sure, Coastal Development probably wanted to pay less than the $270 million that they initially committed to – which is less than the $317 million that the deal was initially announced at in early 2008.

Its obvious that that property is not worth even $200 million – especially in this market. With the Tropicana sold to Carl Icahn and partners in exchange for $200 million in debt – its really no surprise to see the Trump Marina fall through at a $270 million price in actual cash/debt. The Tropicana is in much better condition and is a much larger casino that Trump Marina.

Its a big unknown as to what will happen to the Trump Marina – as well as the other two Trump properties in Atlantic City. A few weeks back it was discovered that Trump Entertainment Resorts had hired an investment bank to shop around the casinos for a sale and Donald Trump himself has also made it clear he would like to make a play for his casinos again. Although I really question his motives – the casinos were ran into the ground under his watch twice (they filed for bankruptcy twice) and only after coming out of bankruptcy for the second time did he step down – which apparently didn’t help the casinos at all since Trump Entertainment Resorts filed for bankruptcy a third time within the last year.

Coastal Development has stated that they are still interested in the Trump Marina property – as long as the price comes down, and if the Trump Marina property doesn’t work out, they are interested in opening elsewhere in Atlantic City.

As for Donald Trump, if he were to purchase Trump Entertainment Resorts again, I think it would be the companies death kneel because he has not proved himself to be a good casino owner/operator. I think the only way to get the Trump Casinos back on their feet is to completely re-brand them – give them some type of theme that’s more Vegas-Like. While the penny slot playing seniors may be upset at the move to remove the Trump name, unfortunately they are not the ones the casinos need to attract.

andrew@alconic-inc.com

I touched on this in my last article about the Tropicana, but I thought it was worth mentioning again because unless you read closely, every newspaper article makes it sound like Icahn automatically gets the property once it reaches auction in bankruptcy court – that’s not the case.

Carl Icahn does have a contract with the overseer of the property to purchase the property, but its pending the auction and if he is the highest bidder which will determine its next owner. Currently Icahn is the highest bidder – but remember.. The auction hasn’t even started yet.

Icahn’s bid doesn’t seem to include any actual cash – its simply a reallocation of the existing bonds he owns, being put toward the purchase price. If someone does come in with a higher bid – Icahn also has the potential to put up cash, or use more of the Tropicana’s bonds which he supposedly owns over $1 billion worth.

The only other bidder who still has publicly voiced his interest in the Tropicana property is the Cordish Companies. David Cordish originally was willing to bid $750 million through a combination of cash and financing for the property, or $525 million all in cash – but apparently a combination of cold feet and the continual declining of the real estate market put that bid on hold. It’s very possible that he may come to the table during the auction.

While I’m no expert in bankruptcy auctions – and especially complex auctions such as this one, it does seem as though Columbia Sussex (the former owner of the Tropicana) will lose their entire investment in the property. When the property was first put on the market in late 2007 it wasn’t intended to go into bankruptcy court, but due to the recession and the bidders placing low bids or dropping out – bankruptcy’s hand was forced.

Its still unclear what Icahn will do with the property if he ends up being the winning bidder; in the past he has simply flipped the property for a higher price down the road (eg: the Sands in AC to Pinnacle Entertainment). Although Icahn’s continual interest in MGM Mirage, where he’s essentially doing the same thing with MGM as he is with the Tropicana – but on a larger scale – may signal other plans.

andrew@alconic-inc.com